IT IS A NEW DEAL

inaugural addressThe only thing we have to fear is fear itself treating the task as we would treat the emergency of war Franklin Delano Roosevelt (FDR) won the election and became the president of the United States on March 4, In his inaugural address, he said: “The only thing we have to fear is fear itself. Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the government itself, treating the task as we would treat the emergency of war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.”

declared a bank holiday in order to ensure that banks were financially sound Emergency Banking Act After the inauguration, FDR’s first act as president was to deal with the nation’s banking crisis. He knew that it was critical to restore public confidence in the nation’s banks. FDR ordered all banks—including the Federal Reserve banks—to close, and he declared a bank holiday in order to ensure that banks were financially sound. On March 9, 1933, FDR called a special session of Congress. The Emergency Banking Act, which authorized the government to inspect the financial health of all banks, was immediately passed. This provided for the reopening of the banks as soon as examiners had found them to be financially secure. Within three days, 5,000 banks had reopened.

Glass-Steagall Banking Act Federal Deposit Insurance Corporation Later, the 1933 Glass-Steagall Banking Act was passed, giving the Federal Reserve Board tighter control of the investment practices of banks, and the Federal Deposit Insurance Corporation (FDIC) was set up to insure all deposits in banks up to $2,500. This amount was increased in 1934 to $5,000. Currently, the amount is $250,000 per accountholder per institution. Roosevelt’s policies restored confidence in the banking system, and money poured back into the banks. The money stock began to expand. This fueled increased spending and production, as well as rising prices. Economic recovery was slow, but at least the bottom had been reached, and the corner turned.

gold standard FDR abandoned the gold standard going off the gold standard had the effect of devaluing the U.S. dollar In the 1930s, the United States was on the gold standard, meaning that the U.S. government would exchange dollars for gold at a fixed price. Commercial banks and the Federal Reserve banks held portions of their reserves in the form of gold coin and bullion as required by law. An increase in the gold reserves would tend to inflate the money stock, and a decrease in gold reserves would tend to decrease the money stock. After his inauguration, FDR abandoned the gold standard. Because gold was no longer exchanged for dollars, the U.S. gold stock was protected. In addition, going off the gold standard had the effect of devaluing the U.S. dollar relative to other currencies. This encouraged exports and stimulated demand for domestic products relative to foreign ones.

Fiscal policies are the spending and taxing policies used by the federal government to influence the economy the Hundred Days to decrease unemployment, increase output, and push prices and wages back up FDR also immediately implemented several policies, including an aggressive fiscal expansion that affected the federal government’s budget. Fiscal policies are the spending and taxing policies used by the federal government to influence the economy. In a special session of Congress that became known as “the Hundred Days,” Roosevelt pushed many programs through that provided the basis for the New Deal. These programs were an effort to decrease unemployment, increase output, and push prices and wages back up.

The New Deal programs are sometimes referred to as “alphabet soup.” There were two parts of the New Deal— and The goal of the New Deal was to restore confidence in the economy. It focused on three areas—relief, recovery and reform: relief relief programs to help immediately recovery recovery programs to help rebuild reform reform programs to prevent the disaster from reoccurring